GLOBAL REPORT—Hotel business and tourism in Greece are in a state of uncertainty, with debate as to what the next few days will bring for the industry.

After Greece voted “no” in the 5 July referendum to a European bailout package and the debt crisis deepened, Alexandros Vassilikos, president of the Athens-Attica & Argosaronic Hotel Association, said bookings are still rolling in.

“Although there have been some cancellations, the situation is far from alarming, and any cancellations are being offset to an extent by new bookings,” he said. Changes in bookings are only affecting some destinations, he said.

Kyros Asfis, an Athens-based hotel digital marketing consultant, whose clients include hotels in Santorini, Crete and the Peloponnese Islands, said the properties he works with are running as per usual and tourists should not expect any hitches.

“We haven't seen any significant influence after the referendum and its result. We are receiving many supportive messages from clients but rarely questions about the present state (and how it will affect their holiday plans). From the operational side, everything at the hotels is running normally without any problem,” he said.

That claim is borne out by major travel agents and tour operators in Germany and the UK – Greece’s two biggest travel markets. The Association of British Travel Agents said its members and holidaymakers are reporting “business as usual” in Greece. Limits on cash withdrawals at ATMs are not being applied to tourists, though there are some question marks over the general availability of cash at machines, according to the association.

“We advise holidaymakers and travelers heading out to Greece to take enough euros in cash to cover all of their needs,” the ABTA said in a statement.

The Greek Tourism Federation, SETE, said the future of the industry is “on standby” after underpinning the Greek economy since 2013.

“The important national and political developments, as they have developed in recent times, have already put the future of Greek tourism on the line,” it announced in a statement.

Despite that and data showing sudden drops of 20% to 30% in holiday bookings over the days leading up to the referendum, SETE maintains conditions for tourists in Greece are unchanged.

“The daily lives of tourists who are in our country, enjoying the experience of the Greek tourism product, is unaffected so far,” it said.

There are concerns that the season won’t be as record-breaking as hoped.

Manolis Tsakalakis, from the Rethymno Mare Hotel in Crete and president of the Rethymno Hoteliers Association, said hoteliers on the island had been confronted with cancellations over past weeks due to the instability.

SETE’s president, Andreas Andreadis, has called on the industry to remain steadfast in the face of continuing uncertainty, and for members to do all in their power to disseminate confidence in the country to tourists.

“Given these developments are happening in the heart of the tourist season, it is imperative that all those involved in tourism do all they can to ensure the operation of Greek tourism is unaffected,” he said. “The priority is to preserve the tranquility and the feeling of security of hundreds of thousands of foreign visitors who are in our country.”

Meanwhile, the Hellenic Chamber of Hotels has called on hoteliers to do everything they can to counter the negative effects of the crisis on Greece’s holiday image, which it acknowledged was having fallout on tourism.

“It is in everyone’s interest for Greek tourism to remain afloat for it to continue to support the country in the future,” according to the statement.

From crisis to crisis

For months, as Greece teetered on the edge of insolvency, the hotel industry has been withstanding in Acropolis-like fashion. Tourism has been the bedrock of Greece through the crisis, contributing to more than 20% of the gross domestic product and the workforce, according to the Hellenic Chamber of Hotels.

Despite sharp drops in sun seekers in 2008 when the crisis first kicked in, tourist numbers rose by 23% to a record 22 million arrivals in 2014, according to the Hellenic Statistical Authority.

A report from Athens-based GBR Hospitality on hotel performance in the first quarter of 2015 shows traffic through Athens airport was up by 30% between January and March, resulting in a 17.3% hike in revenue per available room compared to the same quarter last year, although average daily rate barely budged.

The Athens-Attica & Argosaronic Hotel Association has been predicting occupancy levels in the capital during 2015 would match those of 2014 (when there was a 21% year-on-year hike), after data showed 10% average increases for January through May.

Though that is still far from a certainty, the industry is continuing to show remarkable signs of weathering the crisis, as many reports confirm.

Early indications are that the recent surge in demand for package holidays and hotels will continue. In a statement Monday, the German Tourism Federation, Deutscher ReiseVerban, said the record 2.5 million Germans who stayed in Greek hotels in 2014 (from a total 22 million travelers) were not about to turn their backs on Greece.

The DRV said there had been no noticeable spate of cancellations prompted by the ‘no’ vote, and January through May bookings match last year’s performance—which rose 8.5% from 2013.

Even in the event of a Greek exit from the euro, it said, that would have no effect on existing holiday packages.

VAT concerns

Value-added tax hikes, proposed as part of the government’s austerity measures, also are up in the air. The mooted increase, ranging from 6.5% to 13% (and as high as 23%), would ditch special tax rates enjoyed by more outlying Greek islands such as Rhodes and others in the Dodecanese and Aegean groups.

The issue has divided the industry, with hotel associations on islands such as Crete that feel privileges have led to unfair competition, and others who believe hoteliers should contribute to paying off the country’s debts.

The VAT issues will only add to Greece’s woes, Tsakalakis in Crete said.

“We can absorb the cost as hoteliers or pass it on to our customers. ... Either way it will turn tourists away,” Tsakalakis said.

Big jumps in VAT would “only result in a huge tragedy for Greek tourism,” warned Yiannis A. Retsos, president of the Hellenic Hotel Federation, on his Twitter account last Thursday. Retsos warned that hoteliers would be forced to pass the costs on to tourists, who then will go elsewhere.

In a statement, Konstantinos Marinakos, president of the Arcadia Hotels Association on the Peloponnese Peninsula of southern Greece, said the hikes would hit small- to medium-sized hotels the hardest, “particularly those operating in areas with lower tourist appeal and higher dependency on the domestic market.” Marinakos said this would have serious fallout on gross domestic product and jobs.

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